3 Dividend Stocks to Consider for a Retirement Portfolio

By Milad Marvasti Published : August 13, 2015

The goal for retirement stocks is not only to achieve capital preservation but also capital appreciation and extra income generation. Dividends stocks could compensate the rising cost of living, and help you to enjoy your well-deserved retirement.

I believe an ideal retirement portfolio would be a diversified mixture of solid companies along with ones that pay decent dividends. With that being said, are you thinking about investing for retirement or should you revaluate your existing portfolio?

You may consider these elements before you start taking actions. Yield, dividends, and industry are considered to be very important factors. Based on these premises, I have identified the best dividends stocks that could fit into any retirement portfolio.

Dividend Stocks for a Retirement Portfolio

With bonds yield so low and commodity prices so depressed, high-yield stocks could prove to be a decent choice.

MFA Financial, Inc. (NYSE:MFA) is a Real Estate Investment Trust (REIT) with the majority of its portfolio invested in Mortgage Backed Securities (MBSs). The company’s strategy has been to generate net income and increase shareholder values both in dividends and capital gain. (Source: MFA, last accessed August 12, 2015.)

Because the majority of the company’s assets are in real estate, the company is treated as a REIT for U.S. federal income tax purposes. In this instance, instead of paying taxes to the government, the program allows the company to pay the net taxable income to shareholders in the form of dividends—monthly for this particular company.

After nearly nine years of very low interest rates, when the Federal Reserve raises the rate, the equity market could show some volatility. With that said, MFA has relatively low leverage. Roughly 70% of its portfolio is in MBSs, which has an adjusted rate. The company is expected to continue to take advantage of investment opportunities without being exposed to potential turbulences in the market.

I expect that the company is in a healthy position to continue rewarding shareholders with rising dividends. For the purpose of generating income in your retiree portfolio, this stock may be an adequate pick.

Verizon Communications Inc.’s (NYSE:VZ) growing market share and subscriber base, with an outstanding payout ratio and consistent dividend history, may suggest that the stocks are undervalued. (Source: Verizon, last accessed August 12, 2015.)

The company has a remarkable dividends history. Verizon has grown its dividends since 1994. Despite intense competition in the communications industry, they have been able to mange to maintain market share and the health of their financials.

The company is expected to grow its dividends in the future. In 2014, the company increased its dividends by 3.8% with a 93% payout ratio with about $3.3 billion of cash in hand. All told, I won’t be surprised if dividends increase in the coming months.

Altira Group Inc. (NYSE:MO) is a tobacco giant with the majority of control over the domestic cigarette market. They are still expected to grow in upcoming years. Since last year, the company’s share price has climbed 31.2% from $42.26 per share to around $55.54 today. (Source: Altria, last accessed August 12, 2015.)

Altria Group’s target dividend payout ratio is approximately 80% of adjusted earnings per share. The current annualized dividend rate is $2.08 per common share with 3.07% yield.

According to the latest company’s financials, sales rose 6.8% year-over-year to $4.88 billion and diluted earnings per share (EPS) rose 15.6% to $0.74. The company is raising its guidance for 2015 full-year adjusted diluted earnings per share to a range of $2.76 to $2.81, reflecting a growth rate of 7.5% to 9.5% from an adjusted diluted EPS base of $2.57 in 2014.

To put it in perspective, Altira is an example of decent defensive stock with a relatively stable revenue stream and rising dividend. For the purpose of risk minimization and capital appreciation, Altria’s stock could find its way into your retirement portfolio.